Archive for the ‘Michigan’ Category

April 15th Deadlines

Tuesday, April 14th, 2020

Yes, the tax deadline for the IRS (and federal estimated payments for the first two quarters) is July 15th. However, not all states conformed to this–especially for estimated payments. The following states all have first quarter estimated payments for individuals that are due tomorrow, April 15th:

  • Arkansas
  • District of Columbia
  • Hawaii (due April 20th)
  • Illinois
  • Iowa (due April 30th)
  • Kentucky
  • Michigan
  • Minnesota
  • New Hampshire
  • New Jersey
  • North Carolina
  • Oregon

So if you need to make estimated payments for 2020 for one of these states, do so. If you are mailing your payment, use certified mail (but not return receipt requested–there’s a possiblity no one is there to pick up the mail).

How to Wynne Your Money Back in Maryland

Tuesday, September 29th, 2015

Earlier this year the US Supreme Court ruled that Maryland had to issue full tax credits–including the county add-on tax–to individuals facing double taxation (typically, Maryland residents who earned income taxed in other states). Kay Bell in Don’t Mess With Taxes today noted that the Comptroller of Maryland (Maryland’s state tax agency) has created a webpage for those impacted.

The webpage gives the basics on this, and notes that the Comptroller’s office will not be contacting impacted taxpayers. There’s a link within to a web page on the Wynne Case and the Comptroller’s office has a new form (From 502LC) designed for this specific situation. There’s also a detailed FAQ.

I also need to point out this decision likely impacts other states and jurisdictions. Other states with “add-on” local taxes include Indiana, Ohio, Kentucky, Michigan, Missouri, New York, and Pennsylvania. However, where this impacts taxpayers is residing in a state that does not allow a tax credit for local taxes (Indiana, Iowa, Kentucky, Maryland, North Carolina, and Wisconsin are some of the states so identified) and/or residing in a local jurisdiction that does not allow such a credit (jurisdictions in Ohio, Pennsylvania, Michigan, Missouri, Delaware, and Indiana have been so identified). I have not looked at each state/local jurisdiction to see who is impacted. If you think you’re impacted–remember, you would need to live in a jurisdiction that hasn’t been allowing such a tax credit and have taken such a tax credit on a recent tax return–you should contact your tax professional.

Can an Indian Tribe Open a Casino on Non-Tribal Land that the Tribe Purchases?

Sunday, October 20th, 2013

The Bay Mills Indian Community (Tribe) has a reservation on Michigan’s upper peninsula. The tribe decided to open a casino in Vanderbilt, Michigan–over 100 miles from the reservation. Is that legal?

The tribe purchased the land and argues that since they purchased it with trust funds, it becomes tribal land and a casino can be placed on the land. The tribe also believes it to be immune from lawsuits (sovereign immunity). The State of Michigan disagrees. The case will be heard on December 2nd; a decision should be rendered by next summer. This case will go a long way in deciding on what the limits are to Indian casinos in the United States.

What Can Go Wrong? Nevada Democrats Want to Give Tax Breaks to Movie Industry

Sunday, May 12th, 2013

The Nevada Democratic Party proposed a tax increase on entertainment venues. (It’s doomed, as both Republican Governor Brian Sandoval and Republicans in the state legislature are opposed to it.) To balance it out, Democrats in Carson City are now proposing tax breaks for films in the Silver State. Jon Ralston was told by a state Democratic official, “This is a jobs issue. Democrats want to create jobs here and Republicans want to ship jobs overseas.”

I suggest Democrats in Carson City look at the gory details of film credits in Iowa. Or Michigan. Or the United Kingdom. Again, though, this is a plan that won’t be going anywhere (thankfully) as the votes aren’t there.

Bad States for Gamblers

Monday, October 22nd, 2012

It’s been a while since I’ve listed out the bad states for gamblers. Here’s an updated list. Make sure you read the notes because while all of these states have tax systems that are problematic for gamblers, some impact amateurs while others impact professionals. Note that I do not cover the laws that impact gambling here (such as Washington State’s law that makes online gambling a Class C felony).

Connecticut [1]
Hawaii [2]
Illinois [1]
Indiana [1]
Massachusetts [1]
Michigan [1]
Minnesota [3]
Mississippi [4]
New York [5]
Ohio [6]
Washington [7]
West Virginia [1]
Wisconsin [1]


1. CT, IL, IN, MA, MI, WV, and WI do not allow gambling losses as an itemized deduction. These states’ income taxes are written so that taxpayers pay based (generally) on their federal Adjusted Gross Income (AGI). AGI includes gambling winnings but does not include gambling losses. Thus, a taxpayer who has (say) $100,000 of gambling winnings and $100,000 of gambling losses will owe state income tax on the phantom gambling winnings. (Michigan does exempt the first $300 of gambling winnings from state income tax.)

2. Hawaii has an excise tax (the General Excise and Use Tax) that’s thought of as a sales tax. It is, but it is also a tax on various professions. A professional gambler is subject to this 4% tax (an amateur gambler is not).

3. Minnesota’s state Alternative Minimum Tax (AMT) negatively impacts amateur gamblers. Because of the design of the Minnesota AMT, amateur gamblers with significant losses effectively cannot deduct those losses.

4. Mississippi only allows Mississippi gambling losses as an itemized deduction.

5. New York has a limitation on itemized deductions. If your AGI is over $500,000, you lose 50% of your itemized deductions (including gambling losses). You begin to lose itemized deductions at an AGI of $100,000.

6. Ohio currently does not allow gambling losses as an itemized deduction. However, effective January 1, 2013, gambling losses will be allowed as a deduction on state income tax returns. Unfortunately, those gambling losses will not be deductible on city or school district income tax returns, so Ohio will remain a bad state for amateur gamblers.

7. Washington state has no state income tax. However, the state does have a Business & Occupations Tax (B&O Tax). The B&O Tax has not been applied toward professional gamblers, but my reading of the law says that it could be at any time.

Why I’m Happy to be in Nevada and Not in California

Tuesday, October 9th, 2012

The Tax Foundation released its 2013 State Business Tax Climate Index today. Last year, I was a California resident; in the 2012 Index, California ranked 48th out of 50 states. I now reside in Nevada, which ranks 3rd out of the 50 states. In this case, 3rd is third best. Here are the top ten:

1. Wyoming
2. South Dakota
3. Nevada
4. Alaska
5. Florida
6. Washington
7. New Hampshire
8. Montana
9. Texas
10. Utah

And the bottom ten:
41. Maryland
42. Iowa
43. Wisconsin
44. North Carolina
45. Minnesota
46. Rhode Island
47. Vermont
48. California
49. New Jersey
50. New York

This just a listing based on taxes. If we added in regulations, California might even fall to 49. (Based on what I know of New York, it would be difficult for the Bronze Golden State to hit bottom.) States showing the best improvement were Michigan (which went from 18 to 12) and Maine (from 37 to 30). Michigan is especially notable because its corporate ranking went from 49th to 7th!

Taxes and regulations matter. On Monday, the Tax Foundation released a map showing annual income lost and gained due to interstate migration in 2009:

Annual Income Gained or Lost due to Interstate Migration

Shock of shocks, New York and New Jersey are in the top ten of loss of income back in 2009. Michigan was worst off (remember, Michigan’s tax system was horrible); Montana was best followed by South Carolina. Low tax states generally did quite well, with Florida #3, Wyoming #4, and Arizona #5.

Returning to the state business tax climate, taxes matter. Kudos to the Tax Foundation for their vital work. As the Tax Foundation stated in their report,

Taxes matter to business. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system, and the long-term health of a state’s economy. Most importantly, taxes diminish profits…

States do not enact tax changes (increases or cuts) in a vacuum. Every tax law will in some way change a state’s competitive position relative
to its immediate neighbors, its geographic region, and even globally…Entrepreneurial states can take advantage of the tax increases of their neighbors to lure businesses out of high-tax states

I’m Envious

Monday, September 3rd, 2012

Two stories related to one of my favorite topics appeared over the weekend. The first comes out of Michigan, where the state legislature passed a law to ban “tax zappers.” The only zappers I ever heard of were these:

Bug Zappers, Courtesy of Wikipedia

That’s definitely not what Michigan banned. No, these zappers are used to skim cash from registers in cash-basis businesses so that sales could be under-reported. Who were the customers in Michigan? According to this story, Detroit area strip clubs. It appears that sales of the “Journal Sales Remover” may have been better than thought of. I wrote about this product in 2010; it wasn’t a bright idea then and it’s not one today.

Of course, the new Michigan law is overkill. Anyone violating the new law is also violating various sales tax laws, committing tax fraud against both the IRS and Michigan, and likely violating local ordinances, too.

So from Michigan lets head west to Minneapolis. Last Friday night Envy was raided. That’s Envy, the nightclub. Minnesota State Department of Revenue officers raided the club; the DOR alleges that the owners of the club, James and Susan Beamon, may be skimming cash, grossly underreporting withholding taxes, and not paying all their sales tax. This news story notes that per the search warrant the owners of the club reported negligible income for 2009 and haven’t filed 2010 or 2011 returns. And conspicuous consumption may have gotten the owners in trouble:

“Normally, persons with the income levels reported by the Beamons could not afford a high-priced Cadillac,” the search warrant said.

As a reminder, income is taxable whether you make it in cash, checks, or credit cards. That said, the idea that businesses that deal in large amount of cash would be tempted to skim is normal. That’s why cash businesses such as strip clubs and nightclubs are far more likely to be audited than, say, a jewelry store.

[Image from Wikipedia]

Best States for Entrepreneurs: South Dakota, Texas, and Nevada Lead the Way

Sunday, April 22nd, 2012

The Small Business & Entrepreneurship Council released last Monday their 2012 Business Tax Index. There aren’t many surprises when you look at the list of best and worst (at least, for regular readers of this blog). The top seven states have no income tax on individuals. Meanwhile, the usual suspects (with one exception) are on the list of the bottom ten.

First, the top ten:
1. South Dakota
2. Texas
3. Nevada
4. Wyoming
5. Washington
6. Florida
7. Alaska
8. Alabama
9. Ohio
10. Colorado

The bottom ten has a lot of the usual high-tax “Blue” states:
42. Connecticut
43. Hawaii
44. Vermont
45. California
46. Maine
47. Iowa
48. New York
49. New Jersey
50. Minnesota
51. District of Columbia

I was surprised to see Minnesota so low on the list. Minnesota has a high capital gains tax rate; that, combined with its relatively high personal income tax rate, inheritance tax, and the state’s AMT, led to it being near the bottom of the list.

I also need to compliment Michigan. I’ve been down on the state–at times, saying it has been worse than California–but the SBEC ranks the Great Lakes State number 12. Under a Republican governor, Michigan has improved its tax policies.

For those wondering why I’m now in Nevada rather than California, this is just another measure of the problems with the Golden State. Governor Brown and Democrats in the state are discussing measures to further increase the state’s taxes. Well, there are six more spots to go before reaching the top (worst) position!

The SBEC has a nice interactive map showing the 50 states (plus DC); you can view the map here.

Worse than California: Michigan

Monday, December 28th, 2009

Sure, California has problems. Our legislators can’t figure out that if you have $70 billion coming in that you can’t spend $90 billion. Still, there’s plenty of businesses located in the Bronze Golden State (mine included).

Then there’s Michigan. How would you like to be the owner of a small daycare facility and find out you were in a union? “But I’m the owner of a business,” you tell the state. “Tough,” they reply. Yes, that’s really occurring in Michigan.

Is it any wonder why on a per capita basis Michigan’s budget deficit is worse than California’s?

At Least She’s Honest…

Tuesday, November 24th, 2009

California has economic troubles, but it’s not alone. Another state facing serious economic issues is Michigan. Not only is there the recession, but they also have the problems with the automobile industry. So what should politicians propose to help Michiganders facing economic troubles? Cutting regulations, lowering taxes, and improving the business climate all quickly come to my mind. However, I’m not running for governor of Michigan.

On the other hand, Alma Wheeler Smith (D-Salem Township) plans on running for governor next year. Her platform appears to differ just a bit from my ideas. She proposes:

  • $3 Billion of tax increases on businesses by “closing loopholes”;
  • $1.5 Billion from expanding the sales tax to include services;
  • $2 Billion in higher personal income taxes by adding a 9.75% rate starting at incomes of $60,000 (single)

Luckily for Michiganders, Democrats control only the lower state House and not the state Senate. Republicans in the state Senate don’t like the idea of any tax increases and they do control the state Senate.

If Ms. Smith wins nomination the Democratic nomination for governor next year Michiganders will be faced with a stark choice. Vote for an individual who wants to drive out even more business from Michigan, or vote for Ms. Smith’s opponent. At least you know where Ms. Smith stands on this issue.